Heads, talking

Who won? Krugman by a split decision. Why only a split decision? Taylor finished well in the late rounds, flailing away with some atrocious comments about health care that simply offered no proof but parroted Right Wing comments on cost. Krugman caught him carrying his Right low on that point but failed to put him away with a solid Left hook on the real facts about health care costs. He merely made the same points that we need to do something, not that we can calculate and quantify the cost of doing nothing and that the actual reduction in costs will pay for a substantial share of the start up costs of the first five years.

Krugman has failed to show the promise that we expected from his early days, projecting mathematical jabs across the snouts of other young pretenders, especially on health care. He talks a good game, society’s responsiblities, and so on. But, we’d like to see some heavy leather here, knockouts. Krugman has the tools. He needs to start putting some of these pug-ugly economists away. We need an economist to show the devastating sarcasm of a Johnny “the Kid” Galbraith.

The Princeton Panther dominated the middle rounds tagging Taylor with a counter punch against a very weak Right that said we can simply cut taxes, again, an old tired trick used by many now retired amateurs. Krugman bounced that one off Taylor with a savage blow–the fact that we can simply reduce taxes until we have no government at all, “which is what some people want.” Taylor was cut by that one, but fought on. At this point, we felt Krugman could have finished him off with a few sharp jabs about returning to a Dickensian society. But he let Taylor off the ropes.

With a series of counter punches, a strong smashing hit against craggy, cranky, campy old Chuck Grassely, (did I mention creepy?) he put Tayor up against the ropes at the bell.

Cognitive dissonance. You tell the SOB flat out that Medicare’s overall administrative cost is 3%, and that the insurance industry’s is 14%, and he says — quoting his Free Market Buccaneer’s Catechism of Talking Points — that the private sector is ALWAYS more efficient, period, end of story. Fareed agrees. It just can’t POSSIBLY be the case that the government is better at ANYTHING than the private sector.

Especially not at wrecking the global economy, beggaring the working population of America, and creating smug apologists like Taylor, who will never EVER go without health coverage, so long as there’s a single right-wing think tank left on the planet.

Thanks for taking the time to clarify this situation in a way that’s comprehensive. Even though Pro vs Con can actually be counterproductive – after all, there just happen to be more than two sides to an issue – but Taylor’s no slouch so the situation we’re facing did get a good look at.

Taylor seem to put forth a way that contradicted his concerns, though. He blamed the response to the catastrophe for the catastrophe. Yet how could that be? Because the response was something he also claimed wasn’t acting fast enough.

The chronology of the market’s steep drop should be a point of analysis, though. Why, in other words, did it not respond to foreclosures that had been burgeoning? Why did it not see the bubble on this basis? But got out of Dodge as soon as Banks began to claim they needed bailing out. I do believe the answer is that the Market’s have become victim to a psychology that values only certain assets. Obviously, the Market no longer reflects the economy if that’s the case. Giving concern to only that which benefits Capital at the expense of other economic factors is not a sound Market.

Finally, Taylor’s request for Permanent Tax Cut does have potential. Yes, it would have been a quicker jolt to the economy if a Wealth Tax were passed!

Mr. Krugman, good points!
Here in Brazil we are watching this essencial debate about health care in US and this must be capitalized , I mean, not just US but major western countries must face consequences of aging population and how to keep free market balanced with democratic access to basic health care services.

US was (and still) over the last 50 years serving as a benchmark to all democratic free market countries, and now it seems that the basic equation is not working. Less government and the ownership society are not moving towards democratic goals as of better and more accessible health care and education. Friends of mine in US have serious concerns about the cost of living of their families regarding health care and education, so it is a central issue to keep the America as a democratic leadership not just solving the Fed rate policy and some US large companies profitable.

This discussion must be kept in order to deliver broader perspectives of economic policy not push the zero interest rate polily and hope the best for all.

I am not sure that you completely answered Fareed’s question regarding nationalizing the banks. What would the path to recovery have looked like if the banks had been nationalized in, say, September?

You explained that you don’t necessarily believe that the credit markets are completely unfrozen, and the reason that you don’t push the policy of nationalization more fervently is because you doubt the strategy will be adequately considered. Does this mean that you still consider nationalization to be a better, or the best, course of action? If so, how would the recovery differ from its current path?

I am so glad that was taped on Thursday before the single most important news story in history happened. It provided a brief respite from the “All Michael Jackson, All the Time” programming on CNN and everywhere else.

I was waiting for – well, fearing – a closing segment where Fareed would ask you both to comment on the economic impact of the death of Michael Jackson and the cancellation of his fifty-concert marathon.

Good God! When John Taylor tried to argue that we should control health care costs by providing incentives for the consumer to spend less, Fareed Zacharia made the point that health care consumers (patients) are in no position to second guess the doctor about needed treatements. Fareed said “when my doctor says I need these three tests, I can’t exactly say that statistically I can get by with just one of two. I just get the three tests”. Taylor’s response? If you have a good enough health plan then sure… Oh my! Marie Antoinette! That’s sort of the point: the usual assumptions about efficient markets (informed consumers etc>) don’t apply to health care so there is no reason to imagine that the free market will produce optimum results and Taylor’s proposal is really just to let the non-rich get sick and die! Oh my God!

Your dsagreement with Taylor on the nature of what drives interest rates revels the fundamental flaw in his framework.

Economist need to develop a better way to show concern for wasteful spending rather than a concern for deficit spending.

The economist’s expressed concern for wasteful government spending should contain a disclaimer identifiying that these are political beliefs and therefore lack a professional foundation.

It is very confusing to the general public to hear economists talk about how bad deficits are, except when they aren’t.

From an economic perspective we need government deficit spending whether ‘good or bad’. Economists of all political stripes should be united on this and should leave their politics at the door.

It just would have been good to hear JT admit we need deficit spending without advocating tax cuts. Republicans had their chance with tax cuts and blew it and now Democrats have their chance with spending and could blow it too.

That’s sort of the point: the usual assumptions about efficient markets (informed consumers etc>) don’t apply to health care so there is no reason to imagine that the free market will produce optimum results and Taylor’s proposal is really just to let the non-rich get sick and die! Oh my God!

your friend
Keith

— keith johnson

I think their point is that for the non-rich to get sick and die is the functioning of an efficient market.

It disturbs me horribly that John Taylor used almost no facts and figures to justify his positions relying instead on talking points. Yet, the perception the media gives is that people like John Taylor are winning the economic debate. I strongly urge you to continue speaking publicly on the issues with your rational thought out and coherent arguments. I am constantly amazed at how ideology wins over fact in the media and in the minds of many people. Thank you for doing your good work.

How can the true expert (Krugman) make the viewers understand that the fraud (Taylor) is a fraud? I don’t know, but one suggestion: Before the debate – try to find things Taylor & Co say, that can easily be “disproved”. And in the debate – look for opportunities to mention these things.

To those who are new to the issues, Krugman certainly would seem like the winner…since he did most of the talking…..however….after quiet and thoughtful reflection…Taylor wins….

1) I believe there is a lot to his argument that the near panick in the public sector certainly contributed to the severity of this crisis.
2) Our health care system currently is the worst of all worlds when it comes to cost…there is no competition on cost only in quality and service….we need to go one way or the other…both parties have used scare tactics to prevent reforms ……but in the end ways to contain costs have got to be job number 1 and the rest will follow. The US currently foots the bill for nearly all the innovation in healthcare in the world. I’m afraid that this is in the end is where the cost savings are going to come….saying that it’s all going to come from saving on administrative costs…is at best silly at worst totally dishonest..kind of like Obama saying healthcare IT is going to make it all affordable….

Does Taylor support the idea that the crisis is state’s fault? the bubble! where is the bubble? somebody show this man the bubble please!

I guess He is the type of person who thinks that unemployment if unemployed fault… and the poor are poor because they choose to be… and it’s true that if you get rid of the poor and unemployed there will be no poverty or unemployment. I just wouldn’t want to hear his proposals for such problems.

I totally agree with your assessment of the climate change deniers. It is all politics without a shred of wisdom (or even honesty) in their positions. The climate change bill, and the health care bill, unite “we want something for nothing” people that came of age under Ronald Reagan. Big deficits matter and so do wise policy choices. Apparently, in our present environment, only politics matter.

Krugman definitely won. He was weaker out of the gate, but picked up steam later on.

By the way, I have a question, if you could answer it, or if someone here could answer it. I remember learning in intro macroeconomics about the simple spending multiplier. I think it goes 1/1-mpc. Since, according to Krugman, saving is at 6%, the multiplier should be 1/1-.94, which comes out to 16.67. Multiply that by 787 billion and you get about 13 trilllion dollars. According to the CIA factbook, the US economy is 14.33 trillion dollars. So shouldn’t the stimulus be large enough considering the drop in GDP compared to what we output at full capacity is no where near 13 trillion dollars?

spending multiplier is to estimate how much GDP can generate when a dollor was spent, and the 6% is household savings, 6% of disposable income will not generate several times larger of GDP, they are two opposite things.

I don’t know who won the debate if the judges have never thought about any of this. But in the real world this isn’t a boxing match and there are no judges; Prof. Krugman won simply because he’s right on all accounts and the other guy is 180 degrees wrong about every single last point. Every one.

Plus that guy’s smugness about everything while being wrong is incredibly annoying: the government is responsible for this mess, deficit spending is bad, healthcare is only affordable if you can afford it, tax cuts good….all the typical conservative blather that has been proven wrong in the real world (not that it ever needed to be tested in the first place).

The problem with this debate format is that there isn’t time for Prof. Krugman to go back to the very basic level and explain why cutting taxes doesn’t work – to say nothing of it being unethical and responsible for the government of/by/for the lobbyists’ clients we have now. Then it’s important for people to understand why government spending is not just money being thrown away, it’s *investment*, and it’s good to run a reasonable deficit.

And finally it would have been great to hear a nursery school explanation of why massive stimulus is the only ticket out of this mess. Why can’t these people understand that if people aren’t spending money because they don’t have any or are afraid they’re going to lose their jobs, and business isn’t investing because they have no customers, that leaves the public sector to fill in the gap. Without it the economy will stop!

This stuff is so simple, and I just don’t understand the conservative mind. This is not reasonable people disagreeing, it’s unreasonable people being disagreeable.

Having said that. Farheed Zakaria GPS is hands down the best public affairs program on TV. He’s just terrific.